Fluence Energy Stock Is Falling After Earnings. Why Analysts Express Caution.

Fluence Energy CEO Julian Nebreda said delays in production in the U.S. will likely shift more of the company’s anticipated revenue to fiscal 2026. (PATRICK T. FALLON/AFP via Getty Images)

Any bright points in Fluence Energy’s latest earnings report were overshadowed by warnings that a slower-than-expected production ramp in the U.S. would deal a blow to revenue.

The energy-storage company indicated that revenue in its fiscal year, which ends in September, will likely be at the low end of its previous guidance range of $2.6 billion to $2.8 billion. Analysts polled by FactSet had expected $2.7 billion, at the middle of that range.

CEO Julian Nebreda said delays in scaling new manufacturing facilities in the U.S. led to lower-than-expected quarterly revenue. He indicated that the company would likely recover revenue in fiscal 2026, “as these facilities reach their targeted production levels.”

Fluence stock plunged 18% to $7.51 on Tuesday, headed for the largest same-day percentage decrease since a 46% drop on Feb. 11. Shares have fallen 18% over the past two days.

Aside from guidance, third-quarter results were generally mixed. Net income climbed to $6.9 million from $1.1 million a year ago, but adjusted gross-profit margin shrank to 15.4% from 17.5% over the same period. While revenue grew roughly 25% to $602.5 million, the figure missed the $741.6 million analysts had expected, according to FactSet.

Seaport Research analysts reiterated a Neutral rating on Fluence stock in a note Tuesday. The “net negative update” reinforced some of the concerns underpinning Seaport’s downgrade of the stock at the end of last month, analysts noted. At the time, the firm posited that margins would remain under pressure amid ramping competition.

The firm acknowledged Nebreda’s remark that the fundamentals of the business “remain incredibly strong, supported by a robust backlog.” Management expects around $2.5 billion to covert to revenue in fiscal 2026, including contracts signed in July and August, Nebreda said.

Other analyst commentary was even more negative, with Guggenheim analysts reiterating a Sell rating in a separate note Tuesday. The analysts asserted that issues with manufacturing “likely lie at the cell level,” considering the technical difficulties associated with making prismatic LFP batteries at scale.

The company announced at the end of 2023 that it was teaming up with Yokohama, Japan-based Automotive Energy Supply Corporation to supply U.S.-manufactured battery cells. If the ongoing partnership is successful, Fluence will find itself “in quite a unique competitive position,” given the trade and policy challenges that come with using Chinese-sourced cells, analysts asserted.

However, Guggenheim remains bearish. “Considering the challenges that the company has faced recently, we can see why management might choose to be more conservative with its book-and-ship outlook, and we would be cautious in drawing any optimistic conclusions from the $2.5 billion comment,” the firm wrote.

The majority of analysts are on the fence. Of 21 firms polled by FactSet, 14 rate Fluence Energy stock at Hold. Four are at Buy, and three have Sell ratings.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com